08/25/11
Stocks opened up like a shot out of a cannon, but sellers stepped in and took the indices into the red by early afternoon. The dip buyers said, thank you very much, and took the Dow back to the highs and by the close was up 144-points.
For the TSP, the C-fund was up 1.32% yesterday, the S-fund gained 1.37%, the I-fund added 0.12%, and the F-fund (bonds) lost 0.50%.
After a two-day rally on a little better than average summer volume, the S&P 500 has moved closer to the high end of what may turn out to be a trading range between 1125 and about 1200, but the next resistance level to test is the 20-day EMA, which currently near 1194.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq almost filled the open gap yesterday, but the index might be under some pressure today after Apple's CEO, Steve Jobs, announced his resignation after the close yesterday. Apple is a big part of the Nasdaq Composite and Nasdaq 100 indices and if it has a bad day, it will be tougher for the indices to do very well.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
After the 3-day rally, the NYSE overbought / oversold indicator is back on the overbought side of the neutral line. We have also been seeing a trend of lower overbought readings before peaking, but it has not quite hit the resistance yet on this leg up.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The VIX soared to over 45 a couple of times during the recent correction, and it is now just about testing the 20 day moving average. The last test held and we saw another round of selling.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Tomorrow is the big Jackson Hole meeting with Fed Chairman Ben Bernanke. Investors seem optimistic that something good will come out of it as last year the market started a sharp rally right after the 2010 meeting.
Using yesterday's chart, you can see that the market started to rally on September 1; three days after the 2010 meeting.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
I am always leery when everyone expects something positive (or negative). We may be seeing a "buy the rumor sell the news" reaction. So I may try to lock in some or all of my gains from this recent rally. I will see how the trading goes this morning.
Because of the interfund transfer limits, if I sold, I wouldn't be able to make another transfer to buy the stock funds again until September 1, which would put me in the stock funds on September 2. If we end up seeing a repeat of September 2010, where we saw no pullbacks to speak of for several weeks, then I obviously would prefer to not get too defensive yet.
A push above the 20-day EMA would help my decision to stay in stocks, and a stall at that level would help me decide to jump to the G-fund. The 20-day EMA is about 1.5% from where we closed on Wednesday and moving above it may be a little too optimistic of a target for the next two days after what happened over the last two. We'll see.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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